Testing the Hypothesis
that equity payback financing architectures
deliver fiduciary minimum cash flows
from fiduciary-grade financings
sufficient to perpetuate
The Pension Promise
(and the Endowments equivalent)
faithfully to the fiduciary duties of
the superfiduciary stewards of
society’s shared savings
aggregated into social superfunds
for retirement (pensions)
and civil society (endowments)
as Institutional Fiduciary Owners of
Intergenerational Fiduciary Money
The examples below are offered as interim steps towards research funding for field-trials done as experiments,
to prove the concept and construct a track-record that will comfort others that the architecture is fit to purpose.
Build-out to Take-out
by Fiduciary Money
Impact Capital for
taking control of the problem away from people who are getting rich by perpetuating that problem
giving control of the problem to people who are supported, financially, in solving the problem
Mobilizing the Full Continuum of Capital to Finance Social Enterprise
The inspiration for this strategy is taken from Real Estate and Tax Credit Equity in the US, where a project is typically:
- developed to “shovel ready” by enterprising visionaries using enterprise resources (bootstrap or Family & Friends; sometimes corporate finance);
- financed to completion and stabilization through bank debt (construction financing);
- refinanced with institutional equity (and prudent term debt) at commissioning/rent stabilization.
This gives us the model for an innovative new approach to financing social enterprise, defined as any business that as any enterprise that does not qualify for, or chooses not to participate in, Neoliberal Financialization and the tyranny of The Growth Imperative, but can be reasonably expected to operate at a scale that requires outside capital and to realize positive cash flows sufficient to repay that capital at fiduciary minimum levels.
We qualify as a social enterprise any enterprising vision that prioritizes enterprise cash flows for fairness in the six vectors of fiduciary-grade:
- Fair Trade in supply chains (consumables/variable costs/OPEX);
- Fair Engagement with Government and Community (PR and Compliance);
- Fair Reckoning with impacts of built environment and operations on Nature and Society (durables/fixed costs/CAPEX);
- Fair Working conditions and compensation (Payroll and Labor Relations);
- Fair Dealing with customers and competitors (product design, pricing and packaging, marketing and distribution, advertising and sales);
- Fair Sharing between enterprising visionaries and the continuum of capital).
The Continuum of Capital provides a fiduciary pathway to prosperity for social enterprise that requires enterprise financing that is different from, and more fit for purpose than, the Neoliberal NPV Path of Angels>VCs>IPO/Asset Managers>Conglomeration/PE/Trade Sale, which is not fit for the purposes of social enterprises.
Family & Friends can make initial investments in the people and their idea. as patrons, if it aligns with their ideas of what needs to be done in the world, buying shares in expectation that the shares will be redeemed by the enterprise with financing provided by Fiduciary Money, once cash flows are stabilized at appropriate levels. The risk here is that stabilized cash flows will not support repurchase at a sufficient price.
Church & Philanthropy might provide grants to the enterprise, if its vision aligns with their MISSION, to develop capabilities for benefiting others.
Taxing & Spending may offer subsidies if the work of the enterprise advances one or more governmental POLICY objectives.
Banking & Lending can offer Prudent Debt as the enterprise acquires PROPERTY that can be pledged as collateral and earns credit through profitable operations over time.
In this thought experiment, scaling up our social enterprise through economies of scale that can authentically deliver the technological PROGRESS towards a future or more that is better for more that the Exchanges & Funds authentically require in order to work correctly, according to their design, is not part of the vision. And forced GROWTH through conglomeration to feed The Growth Imperative of Neoliberal Financialization is rejected, utterly.
So, we skip over Exchanges & Funds, and go directly to Pensions & Endowments, for “take-out” financing at stabilization, through a fiduciary minimum cash flow, plus upside, equity payback/earnback financing o fiduciary-grade cash flows over an agreed Base Case.
Mobilizing Fiduciary Money to Take Control of the Climate Problem
The inspiration for this strategy is taken from our view that the climate problem is really a climate impasse, rooted in a passionate commitment to the wrong theories of action.
Climate is framed as a carbon emissions/pollution control problem that can be solved through governmental regulation to inspire corporate self-regulation, within the social narrative of the most popular climate activism groups like Extinction Rebellion, ThirdAct and FridaysfortheFuture (Greta Thunberg) and the United Nations frame them as being.
This framing leaves the people who are making money making the problem in charge of the problem, while socially shaming and publicly pressuring these bad actors, to stop them from acting so badly.
Lots of words. No solutions.
Others say we need to innovate market solutions to protect the planet. But markets are the problem. They are not going to provide a solution.
If we expand the framing, we will see climate as a choice of technologies problem that requires a new choice of new technologies solution. Climate science has learned that Nature is already using the energy we are extracting from hydrocarbons to keep the habitats on earth hospitable to humans. By taking the energy away from Nature to use in powering our transactions, we are inhibiting Nature’s ability to give us habitats in which to live.
We have to stop doing that.
Which means we have to replace energy extraction from hydrocarbons with new, earth-interactive energy technologies that will not diminish the human-friendly habitats in which we live, leaving the energy in hydrocarbons in those hydrocarbons, to stabilize the habitats on earth within human-friendly zones.
This must be done by everyone, everywhere, all at once. Globally, and right away!
How are we going to do that? Who is going to organize it? Who is going to underwrite it?
The problem is money, and Finance.
Where along the Continuum of Capital can we find an architecture of Finance that has the Mission, the Duty and the Scale to finance such a replace-to-retire strategy for rapidly redesigning and reconstructing the global energy at climate scale, which is planetary, and in climate time, which is NOW?
There is only one. Fiduciary Money. The superfiduciary stewards of society’s social superfunds aggregated into Pensions & Endowments as institutional fiduciary owners of intergenerational fiduciary money, with the fiduciary power to negotiate, and the fiduciary duty to negotiate towards a future of technological sufficiency, social equity and habitat longevity, for living our best lives, as Earthlings on Earth, in the 21st Century, and beyond…
The first step is taking control of the problem, by taking the cause of the problem away from people who are getting rich keeping the problem going, which is making it worse.
We begin our thought experiment with BP, imagining a multi-investor fund of Pensions & Endowments financing the purchase of BP out of public markets ownership, and loyalty to The Growth Imperative, and placing it into superfiduciry stewardship, where they will be supported in pioneering a replicable strategy to replace-and-retire energy extraction from hydrocarbons by:
Commissioning the deployment of new, bioregionally appropriate, earth-interactive energy technologies sized and timed to the
Decommissioning of existing energy extraction from hydrocarbons,
while keeping cash flows through the enterprise suffucient to fiduciary minimums.